Regulatory Enforcement Trends in Financial and Economic Crime

Intensified Enforcement and Higher Expectations for Governance

A clear enforcement trend is the increased emphasis on demonstrable “tone from the top” and explicit board-level ownership of integrity risks. Such ownership is increasingly understood as an active, ongoing responsibility that is visible in agendas, decision-making, challenge, and follow-up, rather than an abstract governance construct allocated on paper. In practical terms, this means that the management body and the supervisory body are expected to steer integrity strategy and priorities, weigh critical signals, and attach consequences to shortcomings. Integrity risk is correspondingly expected to be treated not as a “compliance domain”, but as a core component of operational management, reputational risk, and continuity. The absence of concrete indicators of active involvement—such as substantive debate, clear decisions, and demonstrable follow-through—is increasingly interpreted as a governance deficiency.

Closely related to this is the explicit assessment of the effectiveness of internal control, with the mere existence of policies, procedures, and control matrices providing only a baseline. Supervisors focus on whether controls are executed in practice as designed, whether exceptions are properly recorded and assessed, and whether the organisation is able to detect in time when the control framework is under strain. In that context, the importance of demonstrable “control operation” increases: evidence of completed reviews, the quality of escalations, trend analysis, and a substantiated rationale for choices on prioritisation and the acceptance of residual risk. “Risk appetite” is also developing into an operational steering instrument that is not confined to policy documents, but is embedded in decision criteria, product governance, customer acceptance, exception handling, and commercial incentives. The absence of a file record demonstrating how risk appetite has been applied in concrete circumstances may lead to the conclusion that governance is not sufficiently “in control”.

A third focus concerns the role, positioning, and independence of compliance and internal audit, including critical scrutiny of resourcing. Expectations are shifting towards a model in which second- and third-line functions have sufficient seniority, budget, tooling, and escalation mandate to provide effective countervailing force, particularly where commercial pressure, growth ambitions, or complex cross-border activity increase integrity risks. Assessment is not limited to formal reporting lines, but extends to functional independence in practice: access to information, scope for critical judgement, and whether escalations result in actual intervention. Stricter requirements for management information and board reporting reinforce this: reporting is expected to provide not only metrics, but also interpretation, root cause insight, concrete actions, and clear decision points. In the same vein, scrutiny is increasing on committee structures and collective decision-making, with an emphasis on accountability, the quality of rationale, the recording of dissent, and the demonstrability of alternatives considered. Where governance failures are identified, the linkage to sanctions is becoming more explicit, including the possibility of individual measures in circumstances of insufficient oversight or deficient intervention.

Cross-Border Coordination and “Multi-Agency” Enforcement

Enforcement in financial and economic crime is increasingly characterised by parallel investigations conducted by multiple supervisory and law enforcement authorities, with a higher degree of international alignment. This is reflected in the greater use of information exchange and mutual legal assistance instruments, enabling fact patterns spanning multiple jurisdictions to be reconstructed more quickly and more comprehensively. The consequence is that institutions are more frequently confronted with overlapping information requests, divergent procedural expectations, and differing interpretative frameworks for comparable conduct. The threshold for consistency and completeness is high: discrepancies in statements, timing, or documentation may be magnified across jurisdictions and prompt questions about reliability, governance, and the organisation’s “cooperation posture”. This increases the need for strict control over fact-finding, document management, and internal alignment, precisely because multiple authorities may operate simultaneously under distinct priorities and legal toolkits.

This multi-agency reality also increases the complexity of settlement strategy. Differences in disclosure obligations, privilege regimes, and expectations around self-reporting create a landscape in which a single uniform approach rarely suffices. In practice, tension arises between speed and completeness, between local sensitivities and central direction, and between legal defence and prudent risk management. In addition, the likelihood of “follow-on” proceedings arising from enforcement outcomes is increasing, including civil claims, debarment, licensing risk, and additional supervisory measures. Such collateral consequences require management not only of the immediate enforcement matter, but also of the broader exposure—reputation, contractual triggers, stakeholder expectations, and continuity risk—on a structured basis. A settlement can therefore act as a catalyst for a wider programme of governance intervention and intensified supervision, particularly where deficiencies are characterised as structural or culture-driven.

A further dimension concerns the growing focus on group structures and attribution issues. Authorities increasingly examine the extent to which central governance genuinely permeates foreign entities, and how responsibilities are allocated across the group. This includes scrutiny of third parties in overseas markets, with an emphasis on local execution, monitoring, and accountability for actual compliance outcomes. In addition, coordination is increasingly shifting to the individual level: executives and key employees may become subjects of investigation in multiple countries, with statements, digital communications, and decision trails exchanged cross-border. In that context, expectations rise for global remediation plans that are not only designed centrally, but implemented locally with demonstrable governance, milestones, quality assurance, and effective controls. The growing use of monitors or independent reviewers in international settlements reinforces this trend: external scrutiny requires central direction and local implementation to be demonstrably coherent, both in design and in effectiveness.

Data-Driven Supervision and Technological Investigation

A third dominant development concerns the scaling of data-driven supervision and technological investigation. Supervisory and law enforcement authorities increasingly deploy data analytics, anomaly detection, and pattern recognition to identify risks, set priorities, and test investigative hypotheses. This approach raises the bar for institutions in respect of data quality, data lineage, and audit trails across financial, operational, and compliance systems. Whereas attention previously focused primarily on the presence of reports and controls, assessment now extends to whether underlying data is reliable, complete, and reproducible, and whether definitions are consistent across systems and entities. The absence of robust audit trails or unexplained inconsistencies in datasets may itself be treated as an integrity risk, as it limits the ability to investigate incidents and substantiate governance assertions.

This data-driven focus also translates into more intensive examination of “control override”, with log files, access rights, and exception reporting playing a central role. Authorities increasingly expect institutions not only to maintain policies on privileged access and change management, but also to monitor proactively for misuse, unusual patterns, and unauthorised changes. In the same vein, attention is increasing on communication channels, including messaging applications, BYOD environments, and record-keeping requirements. The standard is shifting towards demonstrable control over communications and data storage landscapes, including clear retention regimes, legal holds, and effective policy enforcement. Where investigations reveal that relevant communications are unavailable, or that retention settings have not been applied consistently, this may raise questions about obstruction risk and the reliability of internal statements. The expanded use of eDiscovery, forensic imaging, and advanced review methodologies means that digital traces are secured more quickly and analysed in greater depth.

A specific area of focus concerns model governance in transaction monitoring and sanctions screening, with stricter assessment of design choices, tuning, validation, and lifecycle management. Authorities assess not merely whether models exist, but whether they are effective in terms of coverage, false negatives, alert backlogs, and “alert fatigue”. Inadequate tuning or structural backlogs are increasingly characterised as control failures with material impact, particularly where warning signals have been apparent for a sustained period. In addition, attention is growing on cyber and identity risks as enablers of fraud and money laundering: weaknesses in authentication, onboarding, and account management are treated as integral components of financial crime risk management. Against this background, expectations are rising that institutions organise “proactive risk sensing”, with integrated monitoring of data, processes, and behaviour, such that emerging risks are identified in time rather than addressed only after incidents become publicly or regulatorily visible.

Enhanced Focus on Individual Liability and “Senior Manager” Accountability

A fourth trend is the strengthened enforcement focus on natural persons alongside corporate exposure. Authorities increasingly pose the question of who was in fact responsible for relevant decisions, what signals were available, and how senior-level oversight and intervention functioned. This development increases the importance of clear role descriptions, delegations, and escalation pathways, with relevance extending beyond formal organisational charts to actual decision-making and spheres of influence. Expectations are therefore rising for demonstrable “ownership” of integrity risks by domain, including the ability to reconstruct which individuals made which assessments, and why. Insufficient clarity in the allocation of responsibilities, or the absence of clear decision trails, may lead to a perception of diffuse accountability, which can be detrimental in enforcement contexts.

There is, moreover, stricter assessment of concepts such as “wilful blindness”, negligence, and deficient oversight. Not only active involvement in misconduct may trigger individual measures, but also the failure to intervene reasonably where red flags were visible. This is reflected in more intensive use of disqualifications, professional bans, and fit-and-proper interventions, as well as increased emphasis on personal involvement in remediation and the follow-up of audit findings. Where audit or compliance issues recur structurally, there is an increased risk that this will be treated as a deficit in governance effectiveness, with potential consequences for individual senior managers. This trend also affects control functions: compliance officers and other key function holders may face heightened scrutiny where structural deficiencies persist, particularly where escalation has not been timely or convincingly documented.

Attention is also shifting towards incentives and compensation as governance instruments. KPIs, variable remuneration, malus and clawback regimes, and the decision-making surrounding them are increasingly viewed as determinants of behaviour and risk appetite. Where incentives disproportionately reward growth or revenue without effective counterweights linked to integrity performance, this may be characterised as a structural governance weakness. In addition, the seriousness of consequences for misleading statements to supervisors or auditors is increasing, with focus extending to content as well as completeness and consistency of communication. Board minutes, “challenge culture”, and the recording of critical discussions are therefore afforded greater weight: the quality of documentation can be determinative in demonstrating that risks were genuinely discussed, that dissent was properly considered, and that decisions were taken on the basis of an identifiable rationale. In this context, expectations are growing for “personal accountability maps” and an explicit linkage between risk domains, decision rights, and the senior managers responsible.

Whistleblowing, Internal Reporting Channels, and Anti-Retaliation

A fifth development concerns the increasing significance of whistleblowing and the effectiveness of internal reporting channels. The volume of reports is rising, and whistleblower information is increasingly valued by supervisory and enforcement authorities as a source for detection, prioritisation, and evidential development. This results in stricter assessment of the independence and effectiveness of internal triage and investigative processes, including whether reports are assessed promptly, consistently, and without inappropriate influence. The bar is high for case management design: clear risk classification, appropriate scoping of investigative questions, robust governance over access to information, and properly documented decision-making on next steps. Where reports are handled in a fragmented manner, or where the organisation lacks insight into trends and recurring signals, this may be characterised as a deficiency in oversight and risk management.

A second focus lies on enforcement in cases of (alleged) retaliation, “chilling effects”, or inadequate case management. Anti-retaliation is increasingly treated less as an HR matter and more as a core component of integrity governance. This means that it is not only formal prohibitions on detriment that are relevant, but also the practical safeguards ensuring that reporters can raise concerns safely, that confidentiality is respected, and that information security is robust. In cross-border contexts an additional layer arises: differences in employment law, privacy rules, and local culture may complicate protection for reporters, while the expectation remains that safe channels and consistent safeguards are available. Supervisors may also inquire into how high-risk allegations are escalated to the board or relevant committees, including timing, completeness of information, and follow-up to decisions taken. Delayed escalation or unclear decision lines may be regarded as an indication that the reporting system is not effectively embedded.

A third dimension concerns the scope and depth of internal investigations and the governance of interviews and evidence. Authorities increasingly scrutinise whether investigations are designed with sufficient independence, whether relevant sources have been fully considered, and whether evidential governance is such that conclusions are defensible. Quality prevails over “box-ticking”: emphasis lies on root cause analysis, structural remediation, and demonstrable embedding of improvement measures. In that context, exposure increases where internal reporting to authorities is inaccurate, incomplete, or inconsistent, as discrepancies may prompt questions about reliability and transparency. Decision-making around self-reporting and voluntary disclosure in this climate requires a disciplined approach, with documented assessments of materiality, timing, factual basis, and remediation commitment. In high-profile matters, the role of third-party hotlines and independent reviewers is also increasing, reinforcing the need for robust governance, traceable decision-making, and a consistent narrative capable of withstanding external scrutiny.

Anti-bribery & Corruption: Third-Party Intermediaries and Public-Sector Risks

Enforcement pressure in anti-corruption remains firmly concentrated on the use of third-party intermediaries, including agents, consultants, distributors and lobbyists, not least because such parties often operate in environments with limited transparency and an increased reliance on informal networks. Authorities are increasingly treating these risks less as a purely due diligence issue and more as an integrated governance and control challenge requiring sustained attention throughout the lifecycle of the relationship. Scrutiny is directed to the extent to which commercial decision-making, partner selection and contracting are embedded within a control model that not only tests upfront, but also monitors performance and risk signals effectively over time and adjusts where necessary. The mere existence of contractual clauses or standard questionnaires is not determinative; what matters is whether the organisation can recognise risk indicators in a timely manner, escalate deviations appropriately, and recalibrate or terminate the relationship when integrity risks crystallise.

A particular focus area concerns beneficial ownership, concealed conflicts of interest and informal network structures which, in practice, may be decisive in identifying the true counterparties and the nature of any quid pro quo. Authorities increasingly assess whether an organisation not only maps formal ownership structures, but also understands the underlying influence lines, including individuals exerting influence through family ties, political connections or commercial proxies. This drives heightened expectations that the commercial rationale for fees, discounts, rebates and “success commissions” is substantively supported, and that deviations from market-conform parameters are subject to critical challenge. In that context, “red flags” are no longer evaluated solely by reference to their existence, but by reference to how decision-making responded to those signals: which alternatives were considered, which mitigations were required, and how the record demonstrates that the ultimate choice was defensible.

Controls around gifts, hospitality, travel and sponsorships are also being tested more rigorously, with particular attention to indirect benefits, timing around tenders or permits, and the use of intermediaries or foundations to channel value. The focus on state-owned enterprises and the qualification of “public function” remains a recurring theme, given that boundary lines between the private and public sphere diverge across jurisdictions and risks may materialise through ostensibly commercial relationships. Expectations are shifting towards continuous monitoring after onboarding, so that changes in scope, fee structures, sub-agents or geographic expansion do not go unnoticed. At the same time, scrutiny is intensifying around procurement integrity and tender governance, including bid management, conflict checks, decision documentation, and the prevention of unauthorised deviations without a documented rationale. Increasingly, accounting provisions—particularly books and records requirements—operate as a standalone basis for enforcement, meaning that deficiencies in recordkeeping and internal control can provide a direct enforcement route even absent proof of bribery as such.

AML/CFT: Effectiveness over Formality

Enforcement in the AML/CFT domain is visibly shifting from formal compliance to demonstrable effectiveness, with emphasis on deficient risk assessments and inadequate calibration of controls. Authorities expect risk assessments to be sufficiently granular and current, aligned to the product mix, customer segments, distribution channels and geographic footprint, and to translate meaningfully into control design and operational execution. Where risk assessments remain generic or fail to reflect operational reality—such as during rapid growth, new propositions or evolving typologies—the risk increases that subsequent controls will be regarded as insufficiently tailored. In that context, the notion of “first line ownership” is being reinforced as a normative expectation: commercial functions are expected to evidence accountability for financial crime controls, with visible involvement in quality uplift, exception management and the follow-up of findings.

The focus on KYC quality continues to intensify, with particular emphasis on UBO determination, verification, ongoing due diligence and the maintenance of customer files in response to changes in ownership, control or risk profile. Authorities assess not only the completeness of documentation, but also the quality of the underlying analysis and the extent to which inconsistencies or “mismatches” are identified and resolved. Correspondent banking, nested relationships and cross-border payment flows remain under heightened scrutiny, given the increased risk of “chain blindness” and limited visibility over underlying transactional activity. At the same time, attention is growing on trade-based money laundering and documentary fraud in supply chains, with institutions expected to recognise signals arising from trade documentation, pricing anomalies, illogical routing or discrepancies between goods and funds flows. The consequence is that traditional AML controls increasingly require supplementation with domain expertise, data integration and targeted scenarios calibrated to trade chains.

Transaction monitoring remains a core area of assessment, with scenario coverage, tuning, governance, backlogs and alert handling evaluated explicitly against the standard of effective detection and timely intervention. Structural backlogs or an excessive level of false negatives are no longer viewed merely as operational shortcomings, but as indicators of insufficient control, with the potential to escalate into enforcement where under-resourcing or inadequate senior sponsorship is evident. Suspicious activity reporting is also assessed more stringently for timeliness, completeness and the quality of narratives, with increasing emphasis on clear articulation of why a transaction is suspicious and which contextual factors were considered. Outsourcing and regtech arrangements bring additional expectations around accountability, audit rights and model risk management; delegation of execution does not entail delegation of responsibility. In this environment, the importance of independent testing, lookbacks and measurable improvement plans with robust governance continues to grow, so that remedial actions are not only announced, but demonstrably delivered and validated for effectiveness.

Sanctions and Export Controls: Expanded Scope and Circumvention Risk

Sanctions and export controls enforcement is characterised by an expanded scope and an explicit focus on circumvention risk, with indirect transactions, facilitation and diversion routes at the centre of attention. Authorities examine closely whether institutions and corporates screen not only direct counterparties, but also analyse the broader chain, including beneficiaries, intermediaries, logistics links and financial facilitators. Against that background, expectations are rising around end-use and end-user checks, goods classification (including dual-use), and the quality of decision rules governing when enhanced due diligence or escalation is required. The emphasis is shifting to demonstrable reasonableness and consistency in the application of controls, with explicit attention to exceptions, overrides and the substantiation of choices where risk indicators are present.

Critical assessment of ownership and control structures is intensifying, in part because consolidation questions and “50%-type” approaches across different regimes drive complex interpretative issues. Authorities expect organisations to apply a robust methodology for assessing ownership and control, including the ability to reassess quickly where shareholder structures or counterparty governance changes. Re-export, transshipment and free zones are increasingly treated as circumvention vectors, meaning that chains previously regarded as commercially ordinary may now require additional explanation and evidence. This development does not affect financial institutions alone; non-financial corporates within trade chains also face heightened oversight, particularly where services, logistics or financing may indirectly enable the delivery of goods to sanctioned parties. The resulting enforcement landscape is broader, and contractual as well as operational controls across the full chain become materially relevant.

Requirements for sanctions screening are tightening, with emphasis on data quality, alert handling and exception governance. Assessment extends beyond tooling to operational discipline in review, escalation and recordkeeping, including the treatment of name matches, transliteration variants and incomplete data. In addition, attention is growing on contractual clauses, warranties and suspension mechanisms that must provide practical leverage to stop transactions, renegotiate relationships or block deliveries when risks materialise. Technology transfers, software, technical assistance and “deemed exports” are attracting increasing scrutiny, particularly because digital services and knowledge transfers are increasingly cross-border and difficult to trace. Voluntary disclosures are rising, but are accompanied by stringent expectations regarding completeness, factual basis and remediation; indications of intent, recurrence, inadequate escalation or misleading communications lead to materially more severe outcomes. Enforcement results are also more frequently linked to broader supervisory interventions, including licensing conditions and governance requirements, making sanctions and export controls compliance a strategic business continuity issue.

Crypto, Digital Assets and Emerging Typologies of Financial and Economic Crime

Supervision of crypto and digital assets is developing rapidly, with emphasis on money laundering risks in VASPs, mixing services and cross-chain transactions, as well as on the manner in which new products and services place pressure on the traditional control perimeter. Authorities increasingly assess whether institutions and platforms can organise customer identification, transaction analysis and risk management at a level proportionate to the speed and complexity of digital value flows. The benchmark is moving towards integrating blockchain analytics into AML monitoring so that risk indicators—such as exposure to mixing, clustering with high-risk addresses, or chain relationships with known illicit services—are incorporated structurally rather than on an ad hoc basis. At the same time, customer identification expectations are tightening, in ways comparable to “travel rule”-type obligations, placing governance around data sharing, privacy, data quality and operational feasibility prominently on the agenda.

Beyond AML considerations, enforcement focus is increasing on market integrity and investor-protection-type themes, including token issuance, market manipulation, wash trading and misleading disclosures. This affects not only issuers, but also trading venues and parties facilitating liquidity or performing marketing and distribution roles. Authorities examine whether governance and controls are in place to detect improper trading patterns, manage conflicts of interest and ensure transparency towards users. Custody and segregation of client assets are also core focus areas, with expectations around governance, access, key management, reconciliation and the ways in which insolvency or bankruptcy risk may transmit. Deficiencies in these areas are more readily interpreted as structural governance weaknesses, not least because client asset protection is regarded as a fundamental precondition for trust in digital financial infrastructure.

A third cluster concerns fraud via social engineering, rug pulls and abuse of platform controls, together with cyber-enabled financial crime and the linkage to sanctions and ransomware. Authorities expect incident response, reporting and cooperation with authorities to be mature, with clear responsibilities, escalation criteria and evidential discipline. Cross-border licensing and compliance mapping become increasingly relevant as global platforms operate across multiple jurisdictions and must operationalise divergent standards. The pace of product innovation increases exposure where control maturity does not keep pace; in an enforcement context, this is often treated as a governance and risk management deficiency rather than a mere “growth pain”. In this environment, emphasis is placed on demonstrable control over technology, data and operational processes, with clear ownership, measurable effectiveness and visible intervention when risks escalate.

Settlements, Remediation and “Compliance Effectiveness” as the Core Determinant of Outcomes

Outcome determination in enforcement matters is increasingly dominated by the quality and credibility of remediation, with early, substantial and consistently executed improvements capable of becoming a decisive determinant of sanctioning. Authorities assess not only whether measures have been announced, but whether the organisation has demonstrated the ability to identify causes, set priorities with precision and implement structural enhancements in practice. Root cause analyses are expected to be more than descriptive exercises; they must provide an analytical rationale linking governance, culture, incentives, process design, data quality and control operation. Sustainable control enhancements should demonstrably reduce risk rather than merely increase administrative burden, which requires metrics, effectiveness criteria and a clear linkage between identified risks and interventions.

Remediation governance is being formalised more tightly, with emphasis on milestones, ownership, quality assurance and independent validation. Increasingly, remediation programmes are expected to be managed as strategic transformations, supported by clear decision-making structures, escalation mechanisms, budgetary anchoring and transparent reporting. The use of monitors or independent reviewers is rising, with scope, deliverables and reporting obligations defined with precision and institutions held to demonstrable progress. This means that project administration, substantiation of choices and evidence of implementation quality become critical, particularly because external scrutiny reduces room for interpretation. In practice, a monitor or reviewer regime can materially raise the bar, as findings must not only be addressed internally, but also defended externally and followed up in a timely manner.

A further component concerns cultural and behavioural interventions, including incentives, performance management and consequence management, which are increasingly viewed as necessary elements of effective remediation. Authorities assess whether “soft controls” are meaningfully anchored in “hard” governance: clear expectations, consequences for deviation, and an environment in which challenge is enabled and recorded. Transparency in settlements is likewise under pressure: the factual basis, completeness and consistency of communications are scrutinised, as incompleteness may lead to matters being reopened or escalation into breach scenarios. Lookback obligations and periodic reassessment of historical exposure are increasing, requiring institutions not only to improve prospectively but also to look backwards to quantify and mitigate the scale of earlier shortcomings. Data and MI standards are therefore essential to demonstrate effectiveness, while failure to comply with undertakings may trigger escalatory consequences, including broader supervisory interventions affecting licences, governance or capital.